When gamekeeper turns poacher, potential Sunday dinners tremble. Who knows better where the game is hiding than a former protector? Alan White chortles about the analogy, as he spent the last 10 years tramping BT’s vast estates, nursing a brood of 7,500 properties worth more than £2bn. Then strap me if he didn’t hand the lot to poacher Land Securities Trillium and bunk off to DTZ Pieda Consulting.
But White bridles at the idea that he has crossed to the dark side. He sees himself somewhere in the middle of the hunt, advising both stalker and prey. That’s all very well for the poachers, as they welcome a gamekeeper’s secrets. But what about the game? How do you overlook the fact that he pushed through the biggest corporate sell-off in the UK? Surely that means he will be beating the same drum for others?
DTZ obviously feels outsourcing is an important new market, and attracting one of its main players was a major coup. ‘We are experiencing growing demand for services from clients wanting to escape the burden of owning and managing their own property portfolios,’ said chief executive Mark Strukett, announcing the new recruit.
But White is adamant: ‘I’m not here to tell everyone to sell property. In fact, there will be times when I will tell them not to sell. This is all about getting the right property strategy, and that varies from client to client.’
He might seem a tad disingenuous when dozens of agents and managers in his new firm would kill to get their hands on buildings released by corporate outsourcing. But it fits exactly the way property professionals are dragging themselves into the 21st century. White is not some gunslinger with a reputation for shooting down portfolios but part of a new setup which amalgamates DTZ’s research and consulting with the financial specializations in Pieda to give rounded advice on business strategies.
‘We see ourselves as going head-to-head with firms like Price Waterhouse and Ernst & Young,’ says White. That has been the cry of several top names over the last decade. This time around, it looks a little more well-based.
Mind you, producing any sort of strategy for property would be a huge step forward for many businesses. Most don’t have the in-house resources to cope with a rigorous appraisal of property assets. They tend to be tied up with routine management and far too low down the pecking order to bang department heads together or talk to board directors.
That’s a lesson he can pass on from a hectic decade at BT. It’s not the one everyone wants to talk about, of course. Every conversation starts with a grilling about what really went on in a few short months between stories about long-term strategic reorganization and the sell-out announcement. It was all quite simple, he says. No haughty instructions from on high. No screaming and crockery-smashing about selling his ‘babies’. Just a new finance director who sat down one day and asked how White could help with the £2bn debt burden.
‘We offered a variety of things. We had already been looking at various sale and leaseback possibilities as part of our strategy,’ he says.
In the end, a total sale seemed the right approach. After years of rationalization, redevelopment and restructuring, BT had ‘reached a plateau’, he says. In effect, it was like a big property company that has done all it can with a portfolio and decides to move on.
The sale was not inevitable but you get the feeling that it might have happened some time further down the line even if there were no debt burden. The critical fact is that White constantly kept the estate under appraisal. The department knew where every brick was laid, what it was worth and the best way to handle it. Any other FD might have had to wait a year or more for a report on the physical condition, the freehold/leasehold split, the potential market value and – most importantly – how it fitted the business strategy.
Few companies know the basics of what they have, let alone its worth. This is where firms like DTZ believe their future lies: cajoling, berating, nagging, doing whatever it takes to make clients sit down and look at their property. But that is only the first step.
Surplus assets can always be found to make a few bucks. Whole portfolios can be packaged up for disposal. ‘But it does not always come to that,’ says White. Total outsourcing needs a long-term view [BT signed a 30-year deal with Trillium]. Some companies face short-term uncertainty which can make outsourcing inappropriate. A bank, for instance, might not know whether it would need high street branches five years down the line. A retailer might only want a quick fix, perhaps involving a location or design shakeup.
Perhaps it is not surprising that Lloyds TSB, one of White’s previous charges, looked but decided not to play. Nor did JP Morgan and a clutch of others like ICL, who could not make the figures stack up. But at least they made the effort to audit – which is one service White will be shouting through letterboxes around Europe, where outsourcing is only now coming onto the agenda.
The second step of knowing how and where property fits the business strategy is even more critical. It lies behind DTZ’s decision to weld Pieda’s financial skills more closely to its property consultancy. When you are telling a widget-maker what to do with its property, it has a lot more clout when you also know all about widgetmaking, the future world demand for widgets and the state of the economy of the widgetmaker’s country.
In-house property teams may not have the width of vision to understand how to integrate property and the business they serve. It’s not their fault, says White. It’s part of a general malaise which pitches surveyors as day-to-day managers well down the pecking order. They can improve matters, although that does not necessarily mean a place on the board as some demand. ‘It might be relevant at a company like Sainsbury, where property is a critical factor. But at BT I was never on the board,’ says White.
Finding an internal champion who is on the board is critical – particularly if that is the finance director. The secret is to produce clear, costed reports – particularly if they show comparison with competitors on how property fits the business.
Poachers can also learn a thing or two. ‘The problem with advisers is that they see property as the center of the world. Clients don’t see it that way. Property is a means to an end – a factor of business.’
It is something he will carry into DTZ - a gamekeeper gently liaising with a band of hungry young poachers. That should produce an interesting hybrid to compete with the old lags still relying on their traps and snares.Alan White FRICS.
RICS Governing Council
Chair RICS Corporate Occupiers Group
Property Advisory Group
Bank of England Property Forum.
1991-2001 - Director, BT Property
Rationalised portfolio by more than 20m sq ft,
Cut running costs by £500m pa.
Raised £500m from surplus assets
Relocation of more than 10,000 staff from central London
Facilities management outsourcing to Monterey
£2bn asset outsourcing to Trillium [largest in Europe]
Corporate Strategy Team of the Year Award 1997.
Corporate Real Estate Executive of the Year Award 1998.
Property Week Award for Innovation 2001.
Property Week Real Estate Strategy Team of the Year Award 2001
1990 – 1991 Director of Property, [TSB Bank] Lloyds/TSB Group.
1986 – 1990 Group Estates Director, [Grand Metropolitan] Diageo plc.
1982 – 1986 Group Estates Director, Dee Corporation plc.
1972 – 1982 Estates Director, [Booker McConnell Ltd.] Booker plc.
1969 - 1972 Regional Development Manager, Fine Fare Ltd.DTZ PIEDA CONSULTING
BBC: advised on partnership with Land Securities Trillium. DTZ Pieda Consulting helped appraise options at every stage from initial analysis of the property portfolio and clarification of objectives, through to development of an estates and services strategy, option appraisal, bid evaluation and partner selection.
Marks & Spencer: securitisation of £350m of property assets. Advice from teams including valuation, retail agency, investment, research, building surveying, management and Pieda Consulting. DTZ has been appointed to undertake the annual valuation of the property portfolio in the UK and Ireland.
Novell: worldwide integration of property portfolio with Cambridge Technology Partners (CTP), a global e-solutions provider acquired earlier this year. Includes more than 150,000 sq m and 95 facilities in 51 markets in the Americas, Europe and Asia Pacific.